good morning. today's top story, stocks at multiyear highs. today banking giants jpmorgan and goldman sachs are set to post quarterly results before the opening bell. plus, we'll get a key read on inflation. it is wednesday, january 16, 2013. "squawk box" begins right now. ♪ good morning, welcome to "squawk box" here on cnbc. i'm michelle caruso ka arcabrerh ross westgate. kelly's off. we'll have more coming up -- there's been a traffic jam in the region. the s&p rising back above the five-year high that it reached -- >> kidding, kidding. kidding.

>> he doth protest too much. in every joke there is a whisper of truth. >> kidding -- is that the expression? >> in spanish -- [ spanish ] >> i don't know whether andrew is delayed because of traffic or can't decide the proper look for a snow day. could be a sweater -- >> sweater? >> a zipper sweater. >> a zweater? >> yeah. you don't get up early enough -- do you live in the georgia? >> yes. >> you're here. >> yes. >> okay. i live 35 miles away. >> and you made it. >> and i have a sports car. >> and andrew lives in the city, he didn't make it. >> don't live where there's a bridge or tunnel between you and where you work is good advice. >> that would mean i have to live in new jersey and i don't want to live in new jersey. >> you made it here. too good for new jersey? too good for new jersey, are you? >> i'm single. i want to live in new york city. you married, you live in new jersey. >> how is it working? >> great, actually. >> you're still single.

notable other -- other notable market activity. the dow transports closed at an historic high. the index soared 15% during the last two months. on our agenda today, a number of economic reports. 8:30 a.m. eastern time, the consumer price index. later in the morning, industrial production. and also the national association of home builders housing market index. in the afternoon, the fed releases its beige book, dull name but exciting. survey of regional economic conditions. in earnings central, two releases likely to steal the show. jpmorgan and goldman sachs, both set to post quarterly results before the bell. very excited. >> well, and -- just to the extent that you know what we're going to focus on. >> as big as the myriad operations of jpmorgan are and as much as we can tell about the economy and financial sector, we will be obsessed with jamie dimon, if he didn't get as much

of a bonus as normal because his pristine reputation because of the wale slipping -- thing we can find as members of the media. >> $6 million trade on a balance sheet of -- >> i don't know how much they made in spite of that. a lot. speaking of the bank, another -- >> look who's here! >> and dressed normally, too. >> can we get the man a chair? he can't sit -- ♪ >> we thought you were trying on different zweaters. on a day like this, what is the right look for a young, happening, dashing -- >> what -- what -- >> you have time. don't do this to viewers. it's not that important. did you not get make-up? >> no. he didn't. >> look at -- this is natural beauty. >> you didn't shave -- you really think you need to be here that much that you can't get make-up? >> absolutely. >> taking one for the team. >> all right. >> speaking of this -- stay on us, please.

morgan stanley will take -- you can get powder or something if you want. just headlines -- >> the women didn't follow you out? >> george washington bridge was a little -- >> no, you have time. >> you want me to call them? >> expecting you around 7:00. you have time. >> we have the headlines. jpmorgan's earnings, a lot going on. >> we'll take three years to pay out 2012 bonuses, high earnings employees. employees expected to be paid 25% at a time starting in may. 25, a quarter at a time. people who quit or are fired won't get their future installments. the plan is said to apply to bonuses of at least $50,000 for most people that are making more than $350,000 annually. the millionaires and billionaires we hear about. that move should better align incentives with shareholder interests and make it harder for employees to leave. >> do you think a union would ever accept this? your pay will not be given to you this year. you're going to have wait three years to get the pay you earn this year. and by the way, if you leave in the meantime, you lose it. >> you need -- >> then if -- if they keep doing

this year after year, you can never leave. right? >> right. >> you need three years of -- even if you're fired of pay over in the -- the union rules over in socialism. >> right. right. >> and then more trouble with the 787. al nippon again. and the 787 dreamliner made an emergency landing at an airport in southern japan after a battery alarm alert. then apparently there may have -- reports that maybe people smelled smoke. the latest in a series of incidents that the new jetliner has had happen to it. as a result, both al nippon and japan airlines now have grounded their dreamliner fleets. that hadn't happened yesterday, but we reported on it last week. and dell, buyout talks appear to be advancing which people didn't think they would. and david faber reporting talks between 13.50 and $14 a share.

the investments from silver lake and other potential investors roughly $2 billion, and the debt financing, people want to do it. seen as oversubscribed. michael dell is expected to invest fresh money in the transaction, and faber says an announcement could come within two weeks, which is less than six weeks, which is what people were saying yesterday. >> all right. other technology news, apple's vice president of retail has left the company. jerry mcdougal was a potential candidate for the company's now-vacant senior vice president of retail position. shares of apple falling below $500 this week. look at that -- $487 a share. premarket higher by a buck. you see ever since the foen 5 actually came out -- the iphone 5 actually came out, people are selling on the news, reports of whether or not they've cut the number of orders for parts internally has pressured the stock. facebook shares also coming under pressure this week. investors appear to be less than thrilled by the company's product announcement yesterday. social networking site unveiled a new tool that lets people search their network of friends to find everything from

restaurants to movie recommendations. >> graph search. we have stocks reporting today. i have gone on facebook, and i'm searching the right graphs for all the stock movements s. that what it does? that seems like a weird thing to try and take on -- you can search for graphs, is that -- is it the graph search? >> social graphs. >> a graph search. >> what's a social graph? >> what you're connected to, what they're searching for, all of these connections. >> we've got jpmorgan and goldman sachs coming out. i want one-year graphs, two year, five year, and ten year -- >> social graphs. social graphs. >> i don't know. i saw it was a graph search. sounds really big. sounds really, really big. >> i don't think investors thought it was that big a deal. >> is it not those kind of graphs? why would nay call it that? i had no idea whether this was important yesterday. >> i think it wasn't important. >> it was not important? >> no. sad to say. >> did you see apple yesterday? >> i saw apple yesterday. >> do you see what all of the

headlines are now? have they got an innovation problem? >> they do have an innovation problem until they don't. >> what about a slightly oversized ipad, if it was teal and slightly oversized. not a maxy pad or mini pad, i think slightly -- i think that would do it. i think that might get them back on track. they have a problem. you can't keep changing the size and color of these things. >> are we getting a tv soon? where's the tv? >> are you looking at me? we've been waiting for devices, and they're not coming. >> high-def of it s no friend of yours today. that's all i'm going to tell you. are you going to go in there -- >> they haven't come out yet? >> listen, we need a softer sort of -- is there a way -- >> the barbara walters filter. >> yeah. can you back it up a little, maybe cleveland? >> can i say, the only thing about make-up on tv, the reason you need to wear it is because

everybody else is wearing it. if everybody else didn't wear it, then -- it wouldn't -- sort of the great equalizer of what's happening. >> that's not true. >> that's not true. >> you need to wear make-up so you look like everybody else off tv. >> back the camera up. they're going to do. get it as far back as cleveland. and make it -- >> he's hot in cleveland. >> yeah. >> am i supposed to do this corporate news? >> i guess you want to see what it looks like on the monitor. >> i guess -- go ahead. corporate budgets protect spending are set to fall half a percent in 2013 from last year's levels. this according to a survey by gartner research. the main reason, companies looking to cut costs amid concerns about the economy. joseph, how about that? >> make-up's coming out. they are. they're going to come out and do -- maybe a little powder. not a base or anything. >> the redness around the nose because it's cold out. >> shiny. in washington news, treasury secretary tim geithner says the government has begun borrowing from the federal employee pension fund now to keep

operating without surpassing its debt limit. these are some of the steps they can take. in a letter to congressional leaders, geithner says the move will free up $156 billion in borrowing authority. we've gone through that this morning. the action has been taken by other treasury secretaries and will not put in jeopardy any monthly pension payments. that's not a lot sounds like a lot. >> not a lot at all. >> fay back later. the house approved $50.5 billion in long-delayed federal disaster aid to the victims of superstorm sandy yesterday by a vote of 241-180. the senate is expected to pass it. the house approved the aid in two parts. $17 billion in funds to cover immediate disaster relief. $33.5 billion in longer term reconstruction funds. big day today as far as birthdays. maybe you're not aware of this -- especially it's appropriate today that it's this gentleman's birthday. >> who? >> whose birthday? >> his 112th birthday. >> google like some -- >> who's that? >> oh, we're going to have video in a minute of -- okay.

i already ruined it. >> zam bone? >> yes. frank, the man, zamboni. google's frosty and -- >> one of my favorite words of all time. zamboni. yes. >> let's check on the markets this morning. the futures after being down most of the session yesterday, we managed to eke out the fifth gain in a row, up 27. down 33 points on the dow industrials today. we are at, as i saw yesterday all day, we were at fresh five-year highs. i would think if you set a five-year high, is it -- >> feel fresh to you? >> is it different if it's a fresh five-year high? >> it is. >> i almost called like the managing editor to say can we -- do we need to always say fresh when it's like a fresh five -- if it's -- >> you don't like iliteration? >> i don't -- no. what if it's a new low, is it a rotten new low? >> distressing new low. >> anyway, there's the s&p crawled up two points this morning. as far as the futures go anyway. let's look at europe and see

whether the tail's wagging the dog -- no, it's down, going the right way. not big moves in any of those markets. check out asia quickly. and fractionally -- not japan, japan down significantly to 2.5% points. if you look at the ten year, gilds above 10%. the energy, $93. and now we'll go to the ten year note. which is now 1.82. i was mistaken. yesterday for a minute i thought we were getting close to two. but rick was talking about. i wasn't paying that much attention. >> what are you guilty about? >> yeah. it was guilts. booms also going. the dollar, $1.33 verse you the euro and 88 on the yen. finally, gold was up significantly yesterday. it's falling back a little today, down about four points. now time for the global markets report. ross westgate standing by in london. mr. westgate, how are you this

morning? >> hey. we're good. thanks very much. as you just saw joe point out, softer here. we have bounced off the session low a short while ago. and the german economics ministry talking about the forecasts for germany, as well. just helping us bounce off that primarily, saying, yes, we've had a weak fourth quarter. will be weak at the beginning of the year. they're expecting a much stronger rebound toward the end of 2013. so the footse 100 was down .5, currently down .3. down .3 for the xetera dax, down .1 as is the french market, ibex down .3%. the euro/dollar, we had an interview with ewald nowotny, the austrian central bank governor. member of the ecb governing council, as well. you see the spike -- we had the session chart, what i was looking for. you would have seen a spike up. we're currently trading at 1.3321. we're sort of 1.3220 before he dismissed comments from the euro group chairman yesterday saying the exchange rate was

dangerously high in terms of euro/dollar. he said the euro rate was not a concern and says he thinks banks are far less rely ant on ecb funding. those things helping the euro into positive note for the session. on a downbeat side, expressing the weakness in the eurozone. we had poor european car registrations, down % in december, vomgs for the eurozone alone, down 11% to nine million. sharply lower than the vehicles sold in the previous two years, as well. some stocks that are down, daimler off, renault down .75%. italian sales, poor. bmw the standout, up .4. there were only two countries in the whole of the e.u. where they improved new car registrations, one was the u.k. although the wider economy is fairly weak. and with bond yields heading toward the u.s. session later,

gild lower. and it is worth pointing out that there was a syndicated $6 billion 15-year issue. they're looking to raise $3 billion to $5 billion. italy nearly raised 10% of required funding for the year. they're frontloading debt kwa t requirements as they should over the first couple of weeks. that's where we stand in europe. back to you. >> a 50-year issue. holy smokes. thank you. >> 15 -- >> 15? oh, i misheard. that was the italians, right. >> 15. >> got it. >> yeah. >> thank you. coming up, the state of the financial -- see, i'm glad i asked. the industry's leading trade group joins us to talk profits, regulation, and a whole lot more next. first, heading to break, look at yesterday's winners&losers.

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welcome back. a lot of big earnings coming out today. ahead of that, we're looking at the dow fight down about 33 -- dow fight down about 33 point. we had three straight earnings sessions. making headlines, oprah's cable network will air the first piece of her interview with lance armstrong tonight. the network is getting an ad

premium, i can imagine, for the cycling champion's confession. the network is a joint venture with discovery communications. own's president says the network expects to sell all the remaining commercial time for the two-part version of "oprah's next chapter." i noticed even "usa today" has mainstream and -- controversial as "usa today." the cover story, lance armstrong, "it's over after a decade of denial, armstrong is still looking out for number one which is why he deserves nothing but disdain." on the cover of the "usa today." it's that -- >> a quote from somebody or -- is that -- >> no, that's their headline. >> they wrote that. >> they're effectively -- an editorial on the front page of the paper? >> effectively. the thing i was seeing -- i have never believed him for like ten years because it was just the evidence was -- what i didn't like was that michelob continued

to run those -- >> michelob ultra ads. >> within six months ago, there he is. fine -- how's that feel? michelob, is that your corporate image now? you spent a lot of money to get the corporate image. you feel -- was that money well spent that you left those on the air? just -- an ostrich that you have your head in the sand? >> listen to this lead -- "lance armstrong is not sorry that he doped. he's sorry that he got caught." >> that is true. that's what women say to men all the time, by the way. >> but you're not bitter. you're -- you live in new york. to find a man -- >> like the rihanna song. >> god almighty. we've already been on that, why he slifs in new york -- >> he brought it up. you think i bring this up? >> she has to live in new york because that's where -- >> i'm single. >> it's willie sutton. that's where -- >> i got. i got it. that's wrts money is. >> that's where the men are. that's where the men with money

are. >> hello. thinking here. now to today's national forecast. eric fisher joins us from the weather channel. hey, eric. >> good morning. i don't want any trouble by the way this morning here. across the northeast, a winter storm, maybe not a blockbuster, but one that's going to cause issues for this morning as you get to the highways and biways. boston, my flying. heavier snow across rhode island, northeastern connecticut, fast moving storm system. but right in the middle of morning rush. so we've already had reports of accidents, schools closing down. a sleepy morning for many. here across southern connecticut, good snowfall rates. the line is right over new york city. probably mixing in with a few sleet pellets, mainly rain, coming north of the city, that's where you'll find the snow. south along 95, all rain. visibility down to about half a mile in hartford, one mile in boston. 2.5 miles in white plains which means it's not particularly heavy there at the moment. total accumulations, again, not huge. the most, three to six inches

with the higher elevations one to three here, elsewhere across connecticut. parts of new york state, it's just the timing that makes it more impactful. a little farther to the south, freezing rain still the story here across parts of kentucky and into tennessee. this is where the freezing rain will fall during the morning hours. the roads are really going to be a mess. probably not enough here in lexington, louisville to bring down power lines or cause major issues. a lot of reports here, be careful on the roads anywhere in the south. and snow tonight, guys, as we head across mississippi, alabama, maybe georgia, winter is coming back. >> we know all about it. andrew was late this morning because winter was here. >> that is true. >> george washington bridge was not my friend this morning. >> we heard that you were not even on the bridge yet. they closed -- >> they closed -- apparently the bridge was shut down for a while. >> the upper level or lower level -- >> the west side highway of also having problems. we were literally going backwards on the highway. to see try to get out. >> bad. i have 33 miles. it was bad. it was bad. >> sleety and bad. >> okay. let's talk banks.

financial leaders coming together today at the annual meeting of the securities industry and financial markets association, commonly known as sifma. joining us, chad helk, ceo of the global private client group at raymond james financial, also the chairman of sifma. good morning to you. >> good morning. >> what's on tap today? >> today's actually not the annual meeting. we're having a briefing with member of the press to talk about what's up in the agenda for this year. and what's on tap is trust and confidence, something you talk about on this show all the time. >> and that you have very little of at the moment. >> that's absolutely right. our level of rating by the markets, by the public, by legislators, by the media, probably at an all-time low. >> like approval for congress almost. >> yeah. very similar. >> i said that to you off camera. i said -- i used the "s "word. bart simpson used it -- for individual investors, it's not

good. aire not excithey're not excite >> it's more than individual investors, it's institutional investors, regulators. >> even though we're back to the numbers, it still isn't -- it's not, you know, people aren't excited about the future. >> people are afraid. the fact is, they've been through a lot of very scary scenarios. they've lost money. >> sounds like a good sign. you don't want people, you know, thinking that -- complacency is not the friend of a rising market. >> the main issue we have to address is earning people's trust and confidence. and there are models where we can emulate. there are things we can do, and so that's the agenda. >> one what are the things you think you can do in this environment? by the way, i talked to bankers who say, you know what, i don't know if anyone's going to trust us. first of all i'm not sure anyone did historically trusted banks. >> agreed. >> and that it may never get that much better until, frankly, the economy gets better and the unemployment picture gets better. >> i would sake exception with never. i think there have been times in the past when the banker was your friend. you knew you could go down and get a loan if you needed to buy a house.

you didn't worry about whether you could qualify. you worried about, you know, what house you wanted to buy. those are the types we need to get back. to frankly, banking's only one part of the financial services industry. this is a very broad, very wide industry. markets are driven based on people's confidence in their future, their willingness to invest in something they think has a better future than the current times. so earning that confidence. you know, financial advisers in our industry, professionals who work with individuals, have the highest level of trust in the industry. all the ratings show. it's not where it once was when things were much better. but still, i think there's a lesson to learn from financial advisers. they work with clients, they listen to clients, they understand their concerns. and they address them. they build a relationship of trust. and that's what our industry has to do. we have to prove to the world that we're listening, that we're going to be responsive to the things that are of concern to them. we're going to deliver solutions that they can have confidence in. >> what do you do about -- look, there's the constant headlines, whether it's -- we're going to

hear today jpmorgan is going to have earnings. yon f they'll talk more about the -- i don't know if they'll talk more about the wale. >> the compensation of goldman sachs will come up. >> compensation coming up as a constant refrain as part of the conversation. there's this -- inside trading investigation that you seem to read about virtually every other day relating to somebody either in the hedge fund world or investment world. i mean, how do you deal with that? >> you know, what you're talking about can be wrapped into the theme of risk management. what we do in this industry is manage risk. you can't eliminate risk. everything has risk. so what you have to do is find a way to manage that to a level of acceptable variance. people can have confidence that whatever they're focused on is not going to go completely high and to the right on them. risk management, prudent risk management is a key part of earning trust and confidence. >> do you think you have the buy-in of everybody in your group to do it the same way? literally one or two people off the reservation is what puts you into trouble every time, right?

>> you're absolutely right. within any organization or any institution, i am convinced that most people are good at what they do, they have the right intentions, and they're effective. but there are always the outliers. what you have to do is find ways to control that. and it t starts at the top of the organization. >> right. >> starts with leadership saying that's not acceptable here. people who don't behave, who don't perform at the level of putting their clients' interests first are not going to be part of our organization. and i think we have to step up and convince the world. >> right. thank you. >> chet, thank you for being here. >> your new expression for off the reservation, that will not fly at the new york times. i guarantee that. or around here. >> i think it's fine here, no? >> no. coming up, shares of boeing dropping sharply this morning. details on the latest dreamliner problems next. >> maybe not after that. how did i know? well, i didn't really. see, i figured low testosterone would decrease my sex drive... but when i started losing energy and became moody... that's when i had an honest conversation with my doctor.

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so...what do men do when a number's too low? turn it up! [ male announcer ] in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work,

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♪ weather reference. >> welcome back to "squawk box." it all hit before the -- our commute was during, while it was hitting. i mean, the salt trucks hadn't really been able to -- there was no salt trucks out there. >> are they going out there now -- >> trying to pass the big semis, going uphill a little where they're going about 50. and i trayed to -- i couldn't accelerate because i was starting to fishtail into the -- >> trying to pass a cop. >> if he needs to be passed, you got to pass him. pass him going 90. that was an issue this morning.

>> it was? >> yeah. >> you whip joint chiefs from the back if he doesn't -- -- jeeves from the back if he doesn't -- >> no, we were having a conversation whether to pass the cop. >> really? you speak farsi or whatever -- >> no. >> i'm joe kernen, not that there's anything wrong with that. andrew kernen with andrew ross sorkin, and michelle car usea--a crewsa cabrera. >> they don't speak farsi there. jpmorgan and goldman sachs set to post numbers before. i know in fact with andrew he insisted on an actual 100% british driver. in his contract. in his contract. >> come on. >> not a fake accent. but right from -- from -- >> has to be british. >> not even irish like branson in downtown abbey.

you wanted like carson type guy. >> yeah. >> let's get to the other morning headlines -- we have more trouble from boeing. al nippon airways saying that a 787 dreamliner made another emergency landing at an airport in southern japan today after a battery alarm alert. the latest in a series of incidents with the new jetliner, as a result, both al nippon and japan airlines have grounded their dreamliner fleets. we talked to phil lebeau and said were people going to ground these planes or continue to keep them in the air. and now you have him being grounded. wonder what united is going to do and the other airlines. >> let's check on the markets so far. future are indicating that we'll have slightly lower open. last i checked. yeah, it's going to be generally flat. s&p will open lower by nearly four. the dow opening lower by 39. the nasdaq would open over slightly higher. over in europe, down across the board. ftse lower by half a percent. cac lower by .25%. and in judiciary overnight we

saw the market -- in asia overnight, we saw the market lower. the nikkei lower by 2.5%. probably has to do with the strengthening yen in the last two days that we've seen. as for the price of oil, it is high ee eer for wti and brent. 93.51. 110.67. 2.70. and the ten-year yields, 1.8%. .8% higher for the ten year in terms of price. the dollar is weaker against the yen and stronger against the pound. 88 yen for every dollar. you'll -- euro's going to cost you $1.33, which has been frightening a lot of the leaders that ship in europe. the price of gold after moving sharply higher yesterday, lower by $4.60 this morning at $16.79 per ounce. joining us from the cme is phillip streibel with rjo futures. not -- you don't do orange juice, phillip, right? that would be o.j. futures. >> you guys are really talking about the cold weather you got.

we got the same thing here. i wanted to wear the ski mask -- >> you got in on time, right? >> i did, but i wanted to wear my new ski mask and goggles. i got back from skiing in idaho and picked up equipment. wanted to get in on the way today. you know, looking at futures here, we'll be more volatile today especially as goldman sachs, jpmorgan earnings come out. and just when you thought that the mark was going to tame down, you got the beige book coming out. we'll get an indication of where the economy is going and where it's been. volatility, people also watching apple k. it regain $500, that's been, you know, a lot of chatter here and there. and then on the equities side, 1471.25 on s&p futures the high back a few days ago. if we could break through the level, you will see increased fund flows, more money coming to the market to the long side. and it seems like, you know, i'm really -- surprised because the debt ceiling concern and talks, it's been pretty much nonexistent on the industrial --

>> the markets at fresh five-year highs. >> yeah. it's all because we had the fiscal cliff. and it was so volatile coming into it. we saw some massive swings and massive breakdowns coming into it. it seemed like the market was all over the place. with the debt ceiling, everyone thinks they'll kick the can, raise the debt ceiling up, or get resolved within -- >> that mean the market's at risk? it would seem yes, right? >> see, if you -- my opinion of what will happen is if there's any small breakdown in it, you know, if there's threats that they may downgrade the s&p, whatever, we'll see a breakdown in s&p down to like 14.50, 14.40. but there are so many people waiting on the sidelines, so much cash. and people looking at u.s. equities over the safety play. they'll start coming in, they'll buy. it i think it's going to be a good year for the s&p this year. >> what does earnings season do?

hearing from jpmorgan and goldman sachs, the financials have been a driver of major averages moving higher this year. >> yeah. a lot of people have such a low bar set for the financials. they've been under pressure for what seems years now. you know, everyone's going to talk about jpmorgan i think that, you know, whatever happened with earnings -- >> the stocks themselves are -- have done phenomenally well on a relative basis. goldman sachs higher, for example, that we're showing. bank of america, et cetera. >> yeah. any kind of breakdown, you'll get a flood of equity coming into them. i think that they think that things like the london wale was a temporary issue. and goldman sachs, talking compensation. i don't think there's going to be any real big developments there. i think any breakdown will end up being bought. now something i can tell you real quick, friday -- >> we got to go. thank you. enjoy your ski goggles. >> thank you. >> i'll tell you why, you see that going along the bottom, boeing 787.

andrew and michelle, i've got the memorandum from al nippon airways. here's the circumstances of the event. and i would call up a boeing chart because almost a lot of the dow weakness is in boeing. boeing closed at 7,694. it fight 73.45 to 73.66. on this flight the aircraft carriers showed messages related to the battery at 88:37 a.m. at 30,000 feet. it doesn't say smoke. there was an unusual smell in the cockpit and cabin. the flight made an emergency landing. later it was confirmed that the main battery in the forward electronic equipment bay was discolored and loelectrolysis solution. there was a leak and smell. as a result, the airline has canceled flights using the 787

on wednesday. no 787 will fly on thursday. and 35 of all the domestic flight will be -- >> this their is -- this is al nippon. >> this is the battery issue. talking about lithium ion batteries. hard to -- >> the stock's going to feel it. we had five straight days of dow gains. and one of the reason the dow is down today is because that's, you know, a three-point loss on -- about almost a 4.25% loss. >> if you looked at the itinerary or ticket for your next trip and saw whatever airline, united or whomever using a 787 -- >> i don't know. are you switching, you switching the plane, calling the airline saying i'd like to be a different plane? >> i think -- i think i'd still go on the 787. >> i'd be washingtony good it getting canceled -- worried about it getting canceled. i would switch. >> you would switch because of insulation -- >> to make sure i get there. and japan airlines canceling all flights today?

>> yeah. japan airlines, as well. that's why i wonder what will happen in the u.s. and european airlines that have taken delivery. there's still, by the way, hundreds of deliveries. >> the faa is going to take weeks for it to complete what it's looking at. with the 787. probably -- i figure we'll talk to phil today, 8:00. we'll talk to phil lebeau. if you have comments or questions about anything you see here on "squawk box," e-mail us, @squawk@cnbc.com. and people are saying, you have electrodes under jeeves' seat. it's not really painful, it lets him know -- >> you have the dr. evil button. ejects people off the set. coming up, my brand of coffee. we switched -- i couldn't afford -- i couldn't say vente no foam -- >> macciato -- >> latte.

i just ask for dproif du-- for from dunkin donuts. more next.

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california is going to be the next state to run on dunkin joining us with details on the expansion plans. dunkin brands president and ceo in miami at the icr exchange conference. that's an annual retail gathering. and you are bringing us this announcement here. i guess i didn't know dunkin was not in california, but i can't

believe you weren't. seems like a no brainer. >> well it is no brainer. what i would say, joe is so many people have written to us, so many investors have asked us, and the question all the time is when are you going to california? as we've been growing from the northeast, we've been moving contiguously across the country, there's excitement about when we're going to california, and the answer is we'll be there opening up new franchises quickly. probably the first ones in two years' time. selling franchises as of today. >> what is the strategy, nigel? how would you do it? would you start everywhere? a huge thing obviously, you know that. so many urban center, so many cities where you could do this. it's not the only place you'd want to do it i guess. seems like a huge undertaking. but definitely one that needs to be done i would think.

>> it is the big undertaking, an attractive state. we have experience with california because we have other brand, baskin robbins, very strong there. they have over 450 stores there. we're going to start in southern california. san diego up to los angeles, taking in palm springs and many counties. so the reason we're going to the south is we already have contiguous market in phoenix and las vegas. so this is just a continuation of our strategy of moving across the country. we also have a distribution center in -- in phoenix, makes sense to start in the south, build up, bulk up in the south, and then move further north later on. >> now, if i want to buy a franchise, what's it going cost me? >> it's going to cost you -- firstly, you need to have the right kind of net worth. you need to have the right liquid assets, about 2.5 million -- >> that's not a problem here, nigel. that's not a problem in this

era. >> no, no, no. you know, clearly we've got some very attractive candidates in the studio. >> yes. >> what i must say is i've been approached by so many people who are in showbiz or sports who are interested in doing dunkin donuts in california. i don't think we're going to have a shortage of high-quality candidates. clearly like you, andrew -- >> thank you, nigel. >> nigel, are you excited about the prospect for finally immigration reform potentially coming in the united states? franchising is such a path to prosperity to immigrants in the u.s. would that be more helpful to business in terms of getting potential franchisees? >> sure. our business effectively was built on immigrants. if you go to the northeast, we've got so many people who came from the portuguese island of the azors. we've got very strong asian community. >> uh-huh. >> we believe that everify was a good piece of process put in several years ago. we worked through that. people come to this country.

in fact, i came to this country from the u.k. so much opportunity and franchising, i think, is a great way for them to go. >> my guys from india said -- there was a birthday cake waiting for me. i mean, does everyone get that, nigel? i think maybe that was special treatment from my -- you know, you're a great ceo, and you're smart. but is that the kind of far-reaching decisions? i think we should open stores in california. is that all you had to come up with to keep your job as ceo? maybe we should go to california. >> i'm sure he designed a new doughnut or something for the holidays. >> i would make that decision. i could move on that, i think. >> joe, i get to make some really exciting decisions. i mean, i have to say besides going to california, my biggest claim to fame was coming up with the royal doughnut for the royal wedding. and joe, i'm going to make sure that you get a special baskin birthday cake every birthday. and perhaps we should send you

coffee every morning because i know you struggle with the quality of coffee in the studio. >> morning joe -- >> that's a good idea. "squawk" runs on dunkin'. when i go in, honestly, have you ever had a bartender where the guy sees you, and you get to the bar and your drink -- my stuff is waiting. >> nice. >> i do go every saturday and sunday. any thoughts that california is so screwed up politically and -- >> financially. >> financially? was there any trepidation at all there, nigel? >> no, no. as i say, we're there with baskin. we feel that we've done great work with our economic units in the last few years. our franchise relationships are excellent. it's something we invest a lot of time in. and then we come back to the union economics. over the past few years, we've worked with our franchisee-owned dcp. we've now got flat pricing to the stores. so any -- any issues in california we think we can overcome by a great unit

economics. >> all right. come back and let us know how it's going step by step. we're -- we're pulling for you. thank you. good to see you. >> send me the franchise application, nigel. >> i want to try -- >> i certainly will. joe, thanks a lot. >> you're welcome. thank you. >> i want a royal doughnut. i don't want an application, that's fine. coming up, my favorite part of filling in on "squawk." we're going to head to the chairs. dish on some of the morning's most provocative headlines. first, though, let's head to the green room and see what's still to come. who's still to come. well-known names gathering including banking analyst chris whelan for economic council's larry lindsay, joining us next hour. what are you doing?

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let's say that you're looking for a dentist. >> okay. >> why? because of this? a lot of people have -- >> they do. >> make it a personal sort of -- >> fine. >> you're looking for a dentist. if you went on google, you would get whatever is most popular. >> or who advertised the most. >> who bought the search word. >> on facebook, let's say i pressed like on my dentist, which i haven't. if i did and others had done the same thing, the result that came back would be a dentist that -- >> in your area or among your

friends? among your friends. >> if you said mexican restaurant, all your best friends love mexican the most, that's what it is. >> google has something like this already, google plus. they bought zagit. >> they have that already. the distinction is there's so much more information facebook has given over to facebook and facebook suggests that's the case because most people haven't used google plus. >> doesn't that sound antido antidotally because how often do you go on facebook versus google plus. >> google is tracking the rest of everything, every search i have ever done so should be able to do this in a different way. >> people have all the information of likes people have clicked, kept all that. nothey kept all that the past eight years and should have a huge trove of information.

>> the company is only eight years old, the like button? that's amazing. >> i've seen yelp when i searched for restaurants. >> but yelp is not based on what your friends like. >> it was down a little bit based on this being possibly a competitive threat. is this monetizing mobile? >> not monetizing mobile but eventually. >> he was wearing a hoodie. yesterday, did you see him? >> not a sweater. a sweater is andrew's trademark. >> we have to get out of the chairs and get ready for big news. coming up the top of the hour we have jpmorgan's quarterly results expected within minutes and goldman sachs afterwards. we have all the numbers and instant reaction. joining us to help out, analyst chris whalen. a very busy two hours ahead.

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jpmorgan is reporting numbers. i was checking the bid and ask. the number is $1.39 versus $1.16. chris was talking about $1.21. the revenue number on first call is expected to be 24$24.4 billi. the number that i see at this right off the bat is $23 and change for jpmorgan. a lot of times there's different revenue. the 23.65 is the number they gave for credit loss, $656 million versus $1.8 billion.

basel 1 tier ratio 11%. the head count decreased to 258, 258,965. there's junk in here, pretext, fi $76 milli76 -- $576 million r tax adjustment and $376 million from something and $700 million from reduced mortgage loan loss. jamie dimon said challenges still exist but as we look forward to 2013 -- let me finish this thought, we look forward -- we remain optimistic. we're committed to doing our part to speed the recovery of the housing market and we continue to see favorable credit conditions across our wholesale

loan portfolios. at first blush. go ahead, andrew. introduce chris. >> chris whalen is here to respond to these numbers. i'm here to say they also put out on their website today. what do you make of these numbers? >> similar to welles making up a lot of earnings numbers with cost cutting, very important. a little light on revenue, i think the story of most banks going into 2013. my guess is interest margins continuing to squeeze because of the fed. >> that's not going to get better. >> the benefit from the fed has gone by on net and tt an alarmi rate and the time's gone >> what's your thoughts on loan growth. >> as jamie said he's trying

hard to put on assets, everyone in the industry is. but with wells they contained conforming loans this quarter to keep the balance sheet from shrinking. i think bankers have made a lot of money in the last 24, 18 months with refinancing and customers. i think in 2013, all the bankers have to go up the risk curve to continue to find opportunities to create assets and growth. >> tearing see this well report? do you care or expecting it? >> i think it was much to do about nothing. the fed and fdic created this problem with their coverage of transaction accounts. >> what does that mean? >> during the crisis they extended blanket and ifdc insurance to blanket accounts.

>> another number they're using is $24.4 billion. >> better. better than 23. intere interesting to me -- middle of the range -- a couple analysts upgrade upgraded j.p. and goldman sachs as the stocks performed well as a result. going forward you're looking at flat revenues for jp and some analysts seeing going down for goldman through the year. not easy for the banks to put on quality assets. this in a way is what the fed wants. volume last year was refinancing, not really driving new home sales. if you're jpmorgan, you haven't really sent a lot of mail out, trying to retain the customers you have and trying to generate as much non-interest you can as with most banks. portfolios only go down so much. we're at the end of that trade.

next quarter, where do you get that earnings number if you don't have strong revenue. >> all that being said, where does that leave you with stock? >> i don't make stock recommendations, i'm a banker. >> jpmorgan tried to increase their business, their volume is up 9%, if that means anything to you and secondly on corporate investment banking they keep putting more assets under custody 8$8.8 trillion. it's all moved there. >> definitely, private banking, trust side, a long source of growth, non-interest income. very important for all these banks. look at wells. wells is half looking at the dollar revenue. >> would you rather own wells or jp? >> for my own portfolio, probably wells. it's less chances for surprises. >> i thought you didn't recommend stock? snow i'm talking about my own

buck. >> they have completed the review of the cio. andrew, is that something you -- >> yes. >> they completed a border review for the cio and management task force. >> i'm trying to find this. >> the earnings supplement? >> i'm on it. >> it won't open it? >> it's not it either. >> that's got all the numbers. >> maybe i'm missing it. we'll keep looking for it. >> the well thing is only significant if you believe there was a breakdown in internal controls. personally, i don't think anything goes by jamie dimon. >> don't you want to read the report? >> no. i was at the meeting. i already went through all this once. i think we will know whatever we will know on all this. >> you're not going to read the report just to make sure? come on! >> no. i have too many other things to read. >> you will stay with us and come back at the pot tbottom of

hour and give us your reaction to goldman sachs when it comes back. let's look at futures. dow is off by 54 points or 55 points opened down and nasdaq off 2 1/2 points and s&p off 5 points. starting the session in the red, the dow climbed 27 points, its fifth straight day of gains and dow transports, record high, 15% in the last two months and a record high, what the markets look like but today looks like a down day, at least we will start that way. boeing shares have taken a hit in premarket trading coming after another dream liner related issue with a 787 jet operated by a japanese carrier having to make an emergency landing with battery malfunctions and japan airlines has now suspended operations of its 787 fleet.

foreign investments did fall for the first time in three years and did draw $7 billion overseas, but down 4% from the prior year. corporate technology spending is likely to fall about a half a percent this year from the new research firm gartner, their firm attributing that drop to the ongoing budget battle in washington and continuing financial woes. >> the board approved 2012 compensation for jamie dimon in the amount of $11.5 million, so you know. >> so you know. what was his number last year? >> this is all i'm giving you right now. it's coming in, in dribs and drabs. you saw all the conjecture over the weekend in the tabloids. they love this, what they're interested in, too, whether he would get docked for what happen happened. if he was docked -- >> like how much of that is cash and options? >> one quick note.

the revenue number we put up on the screen is what's called the managed revenue number. the reported number looks like 24.4. >> the reported number. which one do we compare? >> you have g.a.p. and the managed number they use internally. >> what's your view? go with managed or go with -- >> it's your choice. as an analyst, you have to follow both, aware of the changes in both and the difference between the two. >> the stock is slightly lower. >> on a $40 stock, it's down a percent. >> fox to take dell private. silver lake partners and other investors discussing a deal wourt $14.50 or $15 a share. and they're considering the deal. jpmorgan is considering a potential buyout of the $19 billion company one of the largest deals since the recession. you can see the huge rise in

shares of dell in the last couple of days on reports of the leveraged buyout. another story is the gun measures president obama will unveil to combat gun violence today. the proposal will include a ban on military style assault weapons and high capacity clips and more than a dozen executive orders aimed at circumventing stricter gun control and to stop bullying and boost availability of mental health services. new york passed a law quickly. a lot of the tabloids like the daily news says now, it's your turn, mr. president, over to you after new york has already done it. congress has to approve the ban on assault weapons and ammunition magazines and along with background checks on gun buyers. congress approved aid to

superstorm sandy, the bill will head to the senate where it is expected to pass. coming up next, what advice is larry lindsey giving his clients as the country approaches the debt ceiling. we find out when we come back. plus earnings still to come from goldman sachs, reaction from chris whalen, back to analyze the numbers with us. jacque wi "squawk" will be right back. comments, questions? send them to cnbc on twitter. send them to becky, joe, andrew and the "squawk" staff.

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welcome back to "squawk box." futures lowered, a lot lowered by 53 points. and jpmorgan, $1.39 per share. that was the beat but if you exclude value adjustment, 1.48. earnings are in line and we see it down by 49 cents. >> that 11.5 million jamie dimon earned versus $23 million in the year ago period. the recommendations about looking into the office of the cio, there are all this information is coming out now. the company is recommendi

recommending -- recommendations include revamping the governance mandate and reporting control processes of the cio. the recommendations include impleme implementing numerous risk management changes and improvements in model governments. -- governance and model risks. >> that means they will re-look at them and redefine them or whatever? >> a series of changes to risk governance and organization structure. changes you would make. as chief executive officer, mr. dimon bears the ultimate responsibility for the failures that led to the loss in the cio, in the wells unit. of the 11.5 million mr. dimon received, $10 million is -

is -- let's see -- all in the form of restricted stock units. yeah. the $10 million is all in the form of restricted stock units. that is down 53.5% from the prior year. with respect to the loss in cured in the cio, the board views the loss as a serious mistake by the firm. the last thing it says, its board of directors will continue to be -- >> i'm going through this report that's damming in many ways around jamie and barry, doug, their cfo. it is quite a read and i should say, looks like it's over several -- looks like it's over 100 pages. we will be going through it and talking about it. making some waves this morning. >> a bunch of stuff in that report. charter, they will actually recommend charter revisions that

clearly spell out the cio responsibility to the board. >> we are-inned by larry lindsey now to talk about the effect of the debt ceiling battle. president and ceo of the lindsey group. when you were -- thanks for joining us -- when you were in an administration, did any of the deficit deals that we did, were those occurring at the same time as debt ceiling raises? >> they all do. >> we've heard that that -- i'm not going to accept that, not going to do it, not the way it's done. we're not a banana republic. how many can you recall, deficit deals were affected? it's something that's done, is it not? >> standard operating procedure. we all learned about the power of the purse of democracy. back then, it used to be taxes because they couldn't borrow. now, you can borrow. taxes aren't the only strains

what government can spend. the parliament and congress has to be able to control the borrowing level. that's government 101. >> is zit in g-- dis in geingeny we've already been to the restaurant and trying to stiff the bill? it wasn't the $800 stimulus or any of the things the president's done, it's congress? >> first, you're raising debt limits to cover future spending. fact one is the money hasn't been spent yet. that's not true. >> it's sort of disassembling. >> that's a good word for it. the second fact is congress hasn't approved the money. no congress is supposed to be able to bind a future congress. almost all of our budget is never reviewed by congress.

back in '74, they passed the budget act. they created the idea of entitlement, a majority of the budget. those are never reviewed by congress and we're operating on our fourth or fifth continuing resolution. this congress has never approved any of the money that is going to be spent. so congress has not rung up those bills and the money hasn't been spent yet. so i think just, you know, on basic english test, it fails. >> but your finger up, lick it and put it up into the air. do republicans have the -- do they have the intestinal fortitude, i was going to use some other word -- they're on the run. they're losing the public relations battle. you see him, he always has middle class americans around him, everybody's always on his side, he won the election. will they lose the debt ceiling,

too, will they force the issue or run scared because public opinion is not on their side? >> i think there are really three teams in washington. people on the left that include the president. people on the right, people who voted against boehner's plan b and people who want a deal done. i think in the end, people who want a deal done will prevail. maybe at the last hour or three hours after the last hour, we don't know. it was quite obvious the president was trying to blow up the deal on december 31st, while biden and mcconnell were out there negotiating, the president had a pep rally in the east room in which he directly attacked both the congress and the republicans, people trying to do the deal. any who's done any negotiations know what you should have done is praise the process, not attack the people in the middle of the process. i don't think the president liked that deal, i don't think he wanted a deal. i think he'd rather have the issue and i think in this case,

he'd also rather have the issue. it will be very very hard to get a serious deal done when one of the main negotiators really doesn't want any deal at all. >> we have evidence of that with this interview with john boehner where he said the president told him repeatedly, we don't have a spending problem, we have a health care problem. >> i think that gets to the president's maybe lack of detailed understanding of the problem. >> that's very -- >> i think the president really thinks in a political sense and does not think in terms of a numbers sense. for him, a victory here would be to re-establish his party's dominance. that's what he's after. >> we'll have more . coming up, does that energy drink have you bouncing around the room. the results of a government study may have you thinking twice of cracking one open.

that story next. still to come, goldman sachs quarterly results plus former hewlett-packard ceo carly fiorina on reports of dell going private. just ahead, only on "squawk box". but until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com. ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit.

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welcome back to "squawk." you may think twice about having one of those energy drinks. a new survey ed show eed people seeking treatment after drinking one has surged 98-wide. the number of visits shot up from 10,000 to more than 20,000. the reports don't specify which symptoms brought people to the emergency room but calls energy drink consumption a health problem and seizures can be caused by these drinks? >> really have seizures? >> yes. >> never had one? >> you ever had one? >> never had one. i'm a little hopped up right now. >> you are. >> i can't imagine taking something packed with caffeine. don't we know caffeine is -- >> you drink the coffee.

>> you accept a cup of coffee, have a little wake-up with coffee. stuff packed with caffeine. like taking no doz. that's a horrible feeling, isn't it? >> yes. could be a horrible feeling after. >> you know? >> i had a red bull -- >> never had one. i'm slow to switch. i don't know. >> comments, questions -- of course. anything you see on "squawk," e-mail us and you can follow us on twitter at @squawks cnbc. and we'll have reports when we return. you name it...i've hooked it. but there's one... one that's always eluded me. thought i had it in the blizzard of '93. ha! never even came close.

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welcome back do "squawk box." in the headlines, jpmorgan chase earning $1.48 for its fourth

quarter, excludeing debt adjustment they compare including $1.16, revenue in line with estimates. reven revenue from mortgage applications jumped 15% and posting double digit gains and we're close to an index thon production that is out this morning. we're waiting for goldman sachs. expectations, 3.78 in terms of fourth quarter in terms of earnings and revenue, $7.9 billion. is that your estimate? >> $7.9 should be a good number. the estimates range down to 6s. what's most interesting to me and goldman bank, most analysts

see a light-year coming up and actually declining. whereas jpmorgan, flat revenue. year-over-year up 5 and 10%. q4-q4 was up 10, not a bad number for them. a lot was cost cutting. they cut 10% of facilities costs in the last year at jpmorgan. >> did you see they're forecasting for the fourth quarter that the cio net lost in the first quarter is expected to be $300 million. >> i did not. that's on top of -- >> on top of the $6 billion. snow that's not a big number. not like some things out there just festering. >> no. it hasn't been festering for some time. >> and they're dribbling and winding up losses. >> they say we're taking it seriously and changing what needs to be changed but the task force doesn't believe the cio

loss stem from any specific act or omission and does not appear to be any fundamental flaw in the way compensation was structured for the cio personnel. they're saying -- it's weird, isn't it? what you would expect from a commission. we really take this seriously and doing a lot of stuff but we really haven't found anything we think is that bad. you're seeing stuff scathing for individuals. >> for individuals, they have laid the blame at the feet of you in na drew and talk about barry zhu ber row. >> and jamie dimon. >> they talk about jamie dimon and say he has responsibility as well. they go day-by-day in this report, what happened, e-mails back and forth. >> how much money did they make for the year? what is that number? a big number? >> the cio's office had made them --

>> just jorg cpmorgan with its d of operations -- >> last year? >> a big number. >> $5 billion. >> $5 billion. >> provisions are only $600 million, they're not going a lot lower. that benefit is as low as it will get. >> when they talk about the structure of compensation of people working in the investment office. >> right. >> if this is in theory an office supposed to help off-set the risk of the rest of the book, right? this is a team in theory, is willing to take one for the team, when the book is doing well, in theory, they should be willing to take loss? am i oversimplifying it. if you're getting compensated based on your bottom line performance, you're actually not being compensated in a way that incentivize's you to do what's good for the overall bank, just being compensated on the size of your own p & l, right? >> the cio office was there to

make money, wasn't just a hedge. >> isn't that problematic? >> no. they're running the treasury of the bank and supposed to invest and generate cash flow for the bank. >> it was originally sold to us as something that helps off-set the risks of the rest of the bank. if the bank is ultimately long. the bank is basically long credit, why would your investment office be long credit as well. >> if you go back to jamie dimon's sworn testimony to congress, he said, i had this big pile of cash i could not deploy in lending and go back to the cio's office. >> that sounds like prof trading but it's not. >> that's based on the london's offic office. >> the while and that -- the whale and that it did. >> mr. dimon could appropriately

rely on senior managers for concerns however he could have better tested his reliance on what he was told. this report demonstrates the risk is related to cio activities and mr. dimon bears some responsibility for that. >> they're giving it a full number, but for the fourth quarter n, the number hitting is $5.60 a share. >> holy smokes. the estimate was 3 dollars and something. >> and revenue estimate 7.9 and it was 9.24. there is goldman so far up $1.50. we'll see whether there's junk in there. there's junk in most of these things. it reminds me whatever we used to do when the analyst for go goldman reported because the analyst would miss it by a

factor of 2, revenue per shares and revenue number. the stock is responding in kind. >> a very difficult business to predict. >> it is. trading and other things that happen. they made $14.13 in 2012. you need a full number. you can see, if you multiply that out. >> compared to 4 dollars -- >> amazing. and still trading under single digit price to earnings multiple. >> fixed income commodities. >> and we can break out and give you so much information it would make your head spin. looks like it's well above what people are looking for. investment ranked banking revenue was $1.4 billion. equity revenue, $2.3 billion, investing in lending revenue,

$1.79 billion. investment management revenue, $1.52 billion. i think you'd have to -- are you impressed with this, chris, at this point? >> it's a great quarter. makes me think jp and goldman sachs are really the last two men standing, nobody left. by rights they should be making money because they really own the market as far as domestic dealers are concerned. >> one other comment. >> you have compensation. >> oh, boy. this will trade in at a new high. fresh new high. >> competition 6% higher than 2011. the total is $12.94 billion, however the comp ratio has now come down, so it's 37.9, compared to what was 42.4 for 2011. also worth noting total staff decreased 3% compared with the year.

>> 37. it hasn't been that low in a long time. >> that's low on relative basis where they used to be. >> leaving more on the table for shareholders. my god. >> good thing. >> good thing. >> after the massive crisis, are shareholders back to being whole. we can talk about numbers but on a per share basis, are we back to pre-crisis levels? >> not with jp. goldman, how far are we from the all time high for goldman? >> it was well above that. >> most financials are trading, at least for the banks, well over two times book. they're going to be lucky to be -- >> 250 back in november. in '07, it was at -- the high was about 250 and 70 cents. on this charter, it looks like something happened in 2008 that hurt these shares significantly.

[ applause ] >> i used my facebook graph search. >> when you found that? >> it worked really well. >> not to mix apples and oranges on jpmorgan we had this idea there was a $300 million loss relating to the whale. that was inaccurate. the $300 million is for corporate cio, treasury, all of them. >> i said treasury and cio. >> the cio whale position is actually in the investment bank. >> they call it the treasury and cio loss there, right? >> but the whale trade was no longer part of that group. moved to the investment bank. i wanted to clarify that. >> larry, we will get back to you because i wished i had looked at the ft a little closer. hard liners are shifting their stance over the u.s. debt ceiling. the coke group americans for prosperity is urging restraint from republicans during the negotiations. these guys you said are on the right have moved to those guys you said were in the center,

some of them, anyway, right? >> i think -- >> these guys are folding, caving. they know obama has them on the run, as far as public opinion. they're running off -- >> nothing is ever simple. the debt ceiling is only 1 of 3. >> you'd sequester -- >> i think we will see the sequester, the path of least resistance. congress has to do something to prevent the sequester and the president agree to it. it's unlikely, 1$1.2 trillion, using the dollar for dollar basis, do it twice and -- >> have you seen "41," movie, "41." i saw a couple clips and president bush talking about the nixon year, because he was there and what was it like to be a republican. he said it was not a great time to be a republican at the end of the nixon era and the prospects for the party didn't look very

positive. i don't know. it's even worse now. >> we have a very stable two-party system. there are also times when the democratic party was unstable. >> at this point in time. at this point in time, it reminded me -- i'd like to ask if it's worse now. glad to know it's better. coming up, hewlett-packard carly feorr feorrin -- fiorini us. back in two minutes. a new high for goldman. tomorrow, black zone and ge ready to report. earnings central on "squawsquaw

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quarter, well above estimates of $3.78, revenues of $9.24 billion, also out-pacing estimates of $7.9 billion. that is a very big beat this morning. let's get you to the other story of the morning. rumors of a dell buyout possibly clicking with shareholders. on set, carly fiorina, former ceo of hewlett-packard and a cnbc contributor. thank you for being here. what do you think? do you think this is crazy? makes sense? sounds like we're getting slower to a deal rather than farther apart? >> i don't think it's crazy. i don't think it's crazy. i don't know anything other than what i read. my view is the talks are happening. why does it make sense? it may not happen but it makes sense because, first, michael dell needs time. he needs time because his core

business is crashing very quickly. they have not been an innovator in that business. he is trying to rebuild his business among his other assets. as a public company he doesn't have time to do that. moving too fast. going private gives you time away from the pressure and scrutiny of private markets. is it a big deal? sure. could it be done, i think so. >> when you say he needs time to transform his business. does he have the capability to transform it? sn>> not clear to me. i competed against him. he's a great competitor. if you look at dell's business, they, he, innovated a great supply chain and distribution model and then built an entire company around it. the unfortunate thing was others came along and replicated that supply chain and distribution channel and did it better and cheaper and they haven't moved on. >> haven't figured out the product part of it. >> exactly. they haven't moved on. now, the other valuable asset they have is franchise around

small businesses in particular. that is a valuable asset. they're trying to reposition servi services, storage, but it isn't happening fast enough as fast as their pc business is cratering. >> if you're a private investor are you buying into this to keep the cash flow going or is it dependent on his ability to transform the company as well? >> i don't know. i think possibly if you're a private equity buyer, you're thinking. there is cash in the business. >> a lot of cash. >> he can transform it around a smaller small business franchise and just maybe it opens up possibilities for consolidation in the pc market. the pc business is a declining business. consolidation has to occur. there are only two players left in the u.s., hp, clearly struggling and del. if you take this company private and look at the pieces, maybe -- >> who would you sell the pieces to, hp?

>> i don't know. i'm not in the starter rumor. >> did you ever think about buying dell? >> no. because dell at that point was too big. what we did think about doing, we looked at all strategic options i mentioned on the show prior to contract merger. what we did think about was spinning the pc business off and consolidating with other pc makers. eventually this industry is going to consolidate, it has to. the question is how and when and maybe going private makes that easy. >> thank you for this. what are you doing in new york? >> yes. i'm the chair of "good 360." i talked about that organization when i was here. the national retail federation is in town for their big annual convention, 26,000 retailers. i'm giving a keynote speech there and talking about online product donation, makes sense to take excess stuff and give it to people who need it. >> you buying apple today on weakness? >> i'm not.

i don't know directly. >> how do you feel about apple? buying apple today on weakness. that's the question. >> i think apple has in its dna two things that are unbelievably valuable, innovation. they do it, it's in their dna. secondly, they are completely centered around an extraordinary customer experience. those are two huge assets. >> you saw these charts. it's simplistic. you can see over five years the market cap of the pc makers sucked into the apple- >> exactly. >> it's still $460 billion today versus 20 or 25 for dell. >> when people worry about a particular product with apple when the stock takes a hit, a totalry rational reaction on the market's part, what i think longer term what are the assets they have, innovative dna. they know how to innovate and

center everything around that customer experience. thank you. coming up, reaction to wall street earnings from jpmorgan and goldman sachs. into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it.

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jpmorgan and saks out with quarterly results. jpmorgan looks to open lower and goldman sachs looks to open higher. big big beat on saks and

jpmorgan had a bottom beat and was in line. your thoughts on jpmorgan? >> caller: jpmorgan is better and reported a dollar and consensus looks for $1.15. a pretty solid beat. a lot of noise on the jpmorgan corridor. also, i haven't had a chance to looking through it. the london whale, cio, publicly released. >> anything there in that sticks out to you at this point which is problematic and does it give any explanation why the stock is slightly lower even though goldman sachs is sharply higher? >> caller: not that i've seen in it yet but it's a big document. more i know it's out there than dug through for a whole lot of details. the things people may be critical on for jpmorgan, a lot of moving parts in there. released a lot of loan loss

reserves and tax benefit and make people nervous to call it quality earnings. off-sets are a bigger than expected dba and litigation costs bigger than expected. i net everything out, i come out with a number close to $1.39. people get through the details see $1.39 may be a decent core number opposed to a number inflated by tax benefits and the stock may benefit from that. >> jamie dimon's compensation down 50% compared to a year ago, is that going to hold the dogs at bay? >> at the end of the day, the cio was a bad thing. >> the chief investment office? >> the whale investment was bad thing but jamie does a pretty damn good job. shareholders will want to see him there and happy to see him there. despite the big loss, the

company was still very profitable for the year. not only did they survive it okay but including the the ingi they managed to put up 28, $22 billion in profits. there's a lot of good earnings power in jpmorgan. >> goldman sachs moving higher this morning. as we look into this world where prop trading will be prohibited and lose the ability to generate revenue there, the newly formed brokerage forms, what do we take away from this at this point, this earnings report? >> caller: the bad news is prop trading largely goes away and investment gains, big drivers for goldman goes away, few, because they can't hold as big a part of the pot. off-sets are in that world, you need a lot less capital. goldman has a lot of capital. you're seeing more and more efficiency, one way they will

drive it down. good news is revenues are strong and bad news, a lot is due to investment gains people don't expect to occur but you look at comp expense, they will make up for a lot of that. >> good to talk to you this morning. >> caller: thank you. coming up, dick gephardt on the debt ceiling and a lot more. still to come, the next issue is disrupting the world of magazines by putting thousands of your favorite titles right at your fingertips. the company's ceo talks business succe success. right here on "squawk box." ♪ let's go. ♪ ♪ ♪

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earnings central. >> the number that they're gi giving, nominally is $1.39. the number that is hitting right now is $5.60 a share. >> we have the early market reaction to quarterly results from two banking giants. plus, breaking economic news, consumer inflation data just 30 minutes away. and disrupting the world of

publishers. netflix disrupting magazines and one click gives you almost any title you want as "squawk box" begins right now. 8am welcome back. becky took the day off. it's not because of this, she has time she wanted to take. those are sound bites reported by jpmorgan. i noticed after all this time, there are certain tricks you use because you never know whether that first number they give is the apples to apples. i did it unconsciously. the first one, i said now the nominal number they're giving is -- so i can change it if i have to -- and goldman sachs,

the first number they're reporting is -- you don't know which number the ants include. after 20 years, i'm afraid to -- >> there's a phrase to that. vague enough to be accurate. >> that's my life. speaking of being vague and accurate, our guest host, larry lindsey. >> he wasn't vague once. >> he has clients on both sides. he has more -- you're just speaking the truth again, even torpedos be damned to clients on the left. you advise both parties and you have clients on both sides of the aisle. >> i do and i get paid to tell them the whey it is. >> president and ceo of the lindsey group and director of the economic council under former president george bush at one time.

>> i do have results. i will not equivocate. goldman sachs reporting $5.60 a share above $3.80 estimates. revenue handily beating consensus. jpmorgan beat iing theirs. and $1.16 estimate, revenues were essentially in line and a report of mistakes by executives who played a role in the so-called london whale. it blames dimon, drew, brawnstibraw braun diseasestine and zubrow, tying more closely to the board. the cio is the main focus of the report.

zubrow bears the main responsibility for failures of the cio risk organization including infrastructure and personnel shortcomings and inadequacies of its limits and controls on the synthetic credit portfolio. they cut jamie dimon in half to $11 million. not bad if you can get it. >> only a 1.5 in cash and 10 is restricted stock. >> sounds pretty good. i'll sound on for that, wouldn't you? $10 million, restricted stock. you can live on $1.5. >> and wait three years to get the restricted stock. >> i'll be okay with that. you? you wouldn't. >> no. >> that's the thing. he's not kidding. >> i have high expenses. >> higher than jamie dimon. >> i have high expenses. >> we'll talk more in a few minutes. one thing we talked about,

zubrow in the middle of this and braunstein. we quoted the jamie dimon element of this but there's five or six people who get a lot of blame in the report. morgan stanley will take three years to pay out 2012 bonuses to high earning employees, paying 20% in may. people who quit or are fired, they get nothing. the plan is said to apply to bonuses at least to those making more than $350,000 annually and should better incentive for shareholders interest and make it harder for employees to leave. >> would a union ever accept this? you'll not get paid everything we pay you this year and get paid 25% after that. >> only if we don't fire you. no, this is not -- interesting. >> to the markets, u.s. equity

markets open lower by nearly 70 points. boeing down sharply because of problems with the dreamliner. its stock is lower by one point if it opened now. >> asian markets lower across the board. you can ascribe the 2 1/2% to what we saw in the yen and asia. lower across the board by two-thirds of a percent. more problems for boeing. the 787 dreamliner made an emergency landing in japan after a battery alarm result. as a result, all nippon and japan airlines have grounded their fleets. wow, phil, this just doesn't end. >> it's not good. when you have an emergency landing, it's not good. you mentioned boeing shares down 5% premarket in part because of this emergency landing. here's what we know happened.

about 15 minutes after a lip upon airways took off, a pilot saw a battery light come on and noticed what they call an unusual smell, the smell of smoke in the cockpit and cabin. we should be clear, nobody saw smoke. there were initial reports smoke was seen in the plane. that was at a press conference and ana did not say smoke was seen. they said the main battery was discovered and the elect trroly had leaked. you had the japan airliner flyer and nippon has decided they are grounding their dreamliners. no flights today and tomorrow as they continue looking into the reliability of those planes. a lot of this goes back to what started last week in boston.

there was the fire in the auxiliary power unit, the battery section in the japan airlines flight in boston. that fire prompted the faa to say last week, listen, we will do a special review of the 787 dreamliner review boeing is cooperating with, comes down to primarily one of the main areas of focus is what's going on with the lithion ion batteries used. this was the battery at the heart, the source of the fire in boston last week. it ties soon to know if it was the same exact problem with the ana flight that was -- had the emergency landing in boston. that's what we know at this point. we mentioned shares of boeing under pressure this morning, down 5% premarket, really taking a hit last week, bounced back a bit. no doubt, they will be under pressure, as will shares of u

srs usgasa, the battery maker in japan, down 5% overnight. back to you. >> thank you so much. batteries are so complicated these days. remember, when you were little, you put them in your toys. >> they actually lasted two hours and now still don't last long enough. >> kind of like you. >> my goodness, this is a family show. >> wow, i'm shocked. >> you missed the first hour. >> that's okay, you know. >> rhetoric beginning to escalate on both sides of the aisle in the fight over the debt ceiling. joining us now is dick gebhardt, former house majority leader and ceo of dick gephardt, government affairs. what should i call you? leader or what's the highest title you achieved back then so i can give you the due respect you deserve? >> try dick.

that works really good. >> i think about all the fights i have seen between both parties over the years. you were a real advocate for your party. i look back on you and think what a great gentleman and great guy. i guess it's within the prism we've seen today and pining for the days of dick gephardt. i don't know. y you? >> well, i would hope they would have better conversations and respect one another more than sometimes they have in the past months. i hope they get through this debt limit without leaving a lot of scars behind and get on to this real act they have to deal with, the long-time deficit which remains to be done. >> i've asked more than a few people, leader, about the rhetoric that we're hearing about debt ceilings not being a time to talk about deficit reduction plans. i've had three or four people

tell me historically it has in fact been a time. at this point, to take it off the table is kind of arbitrary and not really -- you know, you can't do it. you can't say, i'm not going to talk about this, i refuse to be a banana republic, especially when you voted for refusing to raise the debt ceiling in 2006, talking about president obama. >> let me give you a history. when i came to the congress in 1977, one of the first days i was there, tip o'neill saw me, said, you look like a nice young guy, we need somebody to carry out the trash. he said carrying out the trash is passing the debt limit increase. i spent five years. this is a crazy story, doing little else than going to my colleagues in the domestemocraty

to get a vote in the debt ceiling. everybody wanted to vote against it because it could be used against them in the election. everybody knew it had to pass and every time it would pass by one or two votes after i worked on it for weeks and weeks. i said, this is crazy. everybody knows you have to pass it, you already spent the money, like going in a restaurant and saying, i don't want to pay the bill. that's cracrazy. we passed something called the gephardt bill when you pass the budget, you pass the debt ceiling automatically to accommodate those budget figures. yes, you're right. this issue raises all the deficit issues. it should. it really is after the fact. >> the reason we're having the problem now because they don't pass a budget. >> yes. exactly. look, they're avoiding the really tough stuff, which is dealing with long term deficits

which we face today. they're much worse than what we faced in the '80s and '90s. they've got to get serious about doing the hard work that has to be done on both sides of the aisle to deal with the specifics how you get this done. >> sir, do you think the u.s. has a spending problem? >> look, we've got a deficit problem. >> is that the same thing as a spending problem or is it different? >> you've got -- look, when i was in congress and when we balanced the budget in the '90s, we were taking in roughly, these figures will be a little off, roughly, we were taking in 20% of gdp and spending 20% of gdp. that seems to me to be a fair place to come out. maybe you could put it at 18, maybe you could put it at 21 or 22. but get an agreement on that, and then go to work on both sides of the ledger. you need tax reform, in my view, corporate pad taxes are too high

in the competitive world we're in. get those issues in front of them and then deal with the spending issues, which primarily are in medicare-medicaid and some of the other domestic -- >> how should people feel when they read this john boehner interview where he said the president said, we don't have a spending problem. how should people feel about that? >> if he said that, there's no way to agree with that. look, we're spending 24 percent of gdp and we're taking in 16%. we've got a spending problem. part of the spending problem is the recession that we've been in. the thing you've got to remember all of this has to be designed to get strong economic growth. the goal is not to cut spending or deal with the deficit. those are vehicles to get to the main goal getting the economy to grow at a faster rate. >> it is possible for someone to look at what he thinks

government should provide for its citizens and it is possible to believe that 25% of gdp should be spent on government services. it is possible that he believes that. and other people might say, but that will hurt the long term growth prospects. it really is possible to think 25% is fine. we've had krugman on saying he thought 50% is okay. >> i don't agree with that. that's a debate we ought to have. i think 20% is a good place to come out. you have to remember, you have state and local taxes on top of that. you're going to get to higher figure for most people in the country. that's a debate worth having. we haven't had that debate. we're talking about specific parts of this debate. now, we're talking about a debt limit, i understand why people bring it up. let's get to the main act, have that debate and let's move on. >> will you come up here and

stay with us for an hour or two and bring the picture that you have of yourself and your addict that has the wrinkles and scars and bald. you haven't changed a bit. we would like to have you come up and guest host at some point. >> i carry out the trash. i'm really good at it. >> that's sort of what i'm talking about. come here and sit here for two hours. we appreciate your time. >> you bet. coming up, goldman sachs earnings much higher than the street expected. coming up, covering for barclays. and netflix gets you unlimited access to magazines on your tablet. you don't have to subscribe to each magazine. one subscription. we'll talk to the ceo at the bottom of the hour. to be the world's best sport sedan... ♪

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goldman sachs report iing fourth quarter earnings much higher than expected. wow, it was a really big beat. we have an earnings guru here. he asks the question, why isn't

the stock even higher this morning? roger, what's your take? >> the beat was two things. one a much lower comp ratio. the way that works, tends to get chewed up in the fourth quarter. an out sized beat and the other longer lending, investments and private equity got marked up a fair amount. i think people were expecting that to be a source of upside. the real beat was in compensation. given it's so weighted to the fourth quarter, the beat isn't as big as it looks. the full year ratio for compensation came out to 34%, it was 32% last year. to the extent there's a longer term lower accrual level to be factored in here, earnings are biased up. >> was that politically driven, do you think? >> i think it's a function of a lot of things. i think that -- i think market

conditions are probably the biggest factor. it was a tough year. when top line is pressured, compensation is one of the biggest pieces to reconcile that to shareholders. >> what does this number or report tell us about this brave new world these banks are entering in with no prop trading? anything? >> it probably wouldn't have been a great year for prop trading given how volatile markets are much of the year. the industry is going to be much more dependent on activity levels, clients trading, facilitating those traced. quite frankly, a better economy. >> what do you think of the stock at this point? >> we think the stock is attractive, trading close to book value. they generated about a 10% roe for the year. about fair value. i think the question is what drives it back to 15 to 20%?

that's what's worth a premium to book. >> what do you think the answer is to that question? >> the answer is one i refer to as higher activity levels. as the economy improves and investor confidence improves and we see more trading activity, that will drive part of it. part of it is the cost realignment you see in compensation. the other piece is having more flexibility on capital front. they're still running liquidity levels higher in this financial crisis. during this fourth quarter they can buy back more stop and equity and reduce returns. they're still handcuffed. >> how much stock would they have to buy back to get rid of all the delusion they suffered in 2008? >> let me put it this way, they've been buying stock to off-set equity used for compensation. the share count's been relatively flat rather than going down. you could boost return on equity

materially if you bought 20% back. i don't think that's something they will do. i do think if it had flexibility, with the stock at these levels, i think they would probably be buying back stock more aggressively. >> roger, good to see you this morning. appreciate it. coming up, breaking inflation data. the cpi for december 8:30 a.m. zplooirchlts of the morning series. the next issue, the way you read magazines. the company's founder and ceo next on set. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping

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welcome back to "squawk box." making headlines, disney unveiling a new game platform today. it will let children move plastic toys that look like pirate captain jack sparrow in a virtual world and tv screen. it will be placed on an electronic portal. it will launch in june. starter pack costs $75. coming up, minutes away from the consumer price index data for the consumer and market reaction. look at the dow jones industrial average and pressure by boeing. ♪

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welcome back to "squawk box". we're about a minute and half away from the consumer price index. rick santelli is standing by at the cme in chicago.

steve liesman is in studio. steve, one thing on the daily news, charlie sheen is going to be a grabbndfather. isn't he 47? >> anthony weiner. anthony weiner still spending money out of his campaign account. >> that's legal, right, in the state of new york? >> it is, lawyers and fees. >> among other things. if i see an article about anthony weiner, i read it because of the bell. >> joe is stalling for time. we have 31 seconds. >> i could have asked you a question. i'm saving viewers from one of your answers to a question. i'm kidding. what are we looking for in the cp cpi. >> i will tell michele. i'm note talking to you, joe. it's supposed to be unchanged,

food and energy, inflation for the miami is not the problem, if it's the problem now. >> because we're winning! ric rick. >> here we go. survey says unchanged on headline, just as steve pointed out, as expected. strip out the all important food and energy, we're up .1, we look at year-over-year, headline up 1.7, a tenth lighter than last year expectations of 1.8. just spot on year-over-year, food and energy at 1.9. that's really it in a nutshell. we still have more data like industrial capacitization and outlization of home builders. one more thing steve knows, word is he was tweeting it last night. ge germans are on their way with

wheelbarrows to take their gold home. that seems to be getting traction. keep an eye on euro yen. that cross trade has a lot of excitement and there has been talk about currency trade wars. we have been talking about it a long time on the floors. >> there's supposed to be an announcement. i did get confirmation a small amount of gold would be moved. plans to bring gold home and bring 50% of gold reserves in frankfurt by 2020. 300 tons are going to leave new york, 374 tons from paris. >> why is that? >> i'm not quite clear why. >> german politics. >> is chthat what it is? >> they want to have it. they moved it out of germany

because of the cold war, a threat the russians would take it. most of it is sitting in the new york fed in world war ii. most europeans moved it here during the war and moving it back. there's something tangible and viserable about having gold. >> the auditors called last october for an official suspicion of t inspections of the gold saying it has never been checked. >> that is trust to never check with the fed about your gold. >> have you ever been there? >> i have been invited but never gone. >> it's quite extraordinary. >> there is really gold in fort knox. >> is there any truth to the rumor clint eastwood will be moving that gold? >> there was a movie about this, right? >> they're moving the gold.

awesome. >> they already did it. i will be able to report the exact day that they move the gold and i will break that move with my sources on the story. meanwhile, let's talk about something way more interesting, fourth quarter gdp. that's what joe was trying to avoid. i'm with joe, boring except it moves stocks in a big way. all these other stories more sexy don't move stocks but gdp, employment moves stocks. >> 1.4%? >> exactly. i have a full screen for you to look at so you don't look at me. the economists after the eight forecasts after yesterday's retail sales number, december better than expected. barclays is the high at 1.5%. they brought their forecast down by a full percentage point at

2.5. macroadvisors down. more than cutting in half of gdp in the quarter and major questions base of the tax increase and hopefully have this for tomorrow modeling the debt ceiling in context of the fiscal cliff. what i'm finding early returns, if we do hit the debt ceiling, were to reduce government spending by the amount of debt we bring in, it will make the fiscal cliff look like a fiscal hill, the effect of the debt ceiling. >> not in the first quarter. it doesn't hit until march 1. the debt ceiling is roughly the same amount as a sequester. the way i would count it is that either one would knock .6 of a percent off the year. >> would you send me the lindsey

foreca forecasting data. i have sandy working for me and macro advisors and lindsey is right up there. >> that's very kind of you. as soon as i give it to all my clients, i'll send it to you. >> it's dubai the end e by end . >> clients are proprietary. >> how do you define default? >> we hear about the white house and tim geithner talk about defaulting. >> there is zero chance we will default in any sense of the world. might be a slowing of vendor payments that happens all the time. >> what color is george washington's white horse, if you ask the right question, you get the right answer. >> it could easily be defined using black's law dictionary as

not making any payment. >> and if we delay a payment to a vendor a couple weeks, that is not default. >> default define by obligation. why not read the congressional research report. >> do you have a copy? let's read it right now. get it up. >> let me tell you -- >> just kidding. >> what do you think, joe e, about the government's fiscal situation is entirely dependent on two things. what party you're in and whether or not that party is in power in the white house. the two things. >> and if you know how to use a calculator to two decimals. >> president obama did not vote for increasing the debt ceiling in 2006 and most republicans had no problem increasing it while bush was in office. those are the two facts you need to know about what everybody is saying about the debt ceiling. >> we have kayla here.

thank you for this. rick, thank you for this. kayla is here listening to the jpmorgan media conference call and has details. >> i hate to break this up. i guess i have to. we're just getting off the media call, the new cfo for jpmorgan, marianne lake joins jamie dimon and the favorite topic the london while, jamie saying the impact of the whale pretty much played out at this point, we're at the end of the way with it. and his pay, the board had a quote tough job. you were talking about how the board posted record profits yet again. are you compensating him on the performance or whale and said the board had a tough job there. he went on to say they won't be disclosing a full end stopped number for what the loss were, 5.7 billion plus or fine nuss

fine -- minus $7 million. housing last quarter was his famous line saying the housing market had turned the corner, the first person to make that call. we saw originations up again in the fourth quarter and said the pipeline is strong for qe-1 but refi activity will go down, as expected, rates start going up. deposits were the killer for margins and expect spread compression to keep happening as deposits grow, interesting, at the heart of what they do but here wall street is punishing them for what it does to their margins. >> we'll leave it there. >> that's the story. >> did he say anything, because we were talking about it all morning, his comps going down? >> he did. he said the board had a tough job and the board's jobs to do and left it in their hands, what he said last summer. >> did he discuss unhappiness?

>> no. he still makes more than brian moynahan and -- >> only a million and a half in cash. >> that's what he made last year. it was the cash portion of the bonus got completely wiped out. everything in his bonus was restricted stock units. that changed. >> i would say the whale report almost suggested it would be embarra embarrassing for people more so than it appeared to be saying his employees acted like children. i expected a little cya. >> i think you have to have lawsuits to have those e-mails come out. they won't put those in a report. i'm convinced they make these things so boring you can't get through them, you can't read them. they take everything interesting out of them. >> thank you for this. we have a guest coming up not boring at all.

next issue described as netflix for magazines, digital access for 80 magazines for a monthly fee. i use the app myself. the company and ceo making his way to the "squawk" set. this is america. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn.

welcome back to "squawk box," the dow opened down 1.58.

a lot of that related to boeing. on set, the ceo of next issue media. i'm here because i use this app every day. people say, what are your favorite apps, this is one of them. >> absolutely. >> netfliction or spot-ifi. i can get movies or magazines i want. >> netflix is looking for continent you like. it's not always first run. this is all you want to read for 10 bucks a month. >> if you pay $14.99 a month or 10 bucks a month you get "the new yorker" or "sports illustrated illustrated". how are you making money off this? it seems like it's a netflix

problem not enough money being made if i have access to 80 magazines instead of buying three or four basically what a normal subscription costs. >> look at the size of business today. you go back, how much does the average household spend on magazines. today, about 50 bucks a year on newsstand as well as subscriptions. there's a huge number of households, probably 50 million that spend less than that. we say, let's increase the size of the pie. increasing actual spin on content, 3x, 4 x, 5 x, increasing the size of the pie and driving deeper engagement, plenty of money there. >> your cut is what? >> it varies, we roughly give 60 to 70% to the publishers, like a netflix. >> if you're paying 15 or $10 a month or 80 magazines, a teeny amount for every magazine so you're scraping nickels and pennies? >> more than that.

this is not a traffic business, pay content, $10-15 a month out of millions of subscribers, $150 million business before advertising. think about the magazine business today. it's a rate-based business, you wait long enough, get enough flyers, you'll get magazines for free. we think people will pay and think that 30, 35% cut can build a huge business. it's all first run content. >> the advertising is still in there. when you're flipping through, you're seeing the magazine pages, ralph lauren or whatever it is. >> when people have next issue, this is where they read magazines, spend all their time reading magazines in this world. we know where you go, cross title opportunities and target opportunities. >> what has the chance it canabalizes -- "the new yorker" a 60, 70, $80 a year subscription. if i have this, i'm not

subscribing to "the new yorker" anymore, the actual print version. >> again, the lifetime value of a customer from next issues talking about levels of engagement way beyond, people are spending two hours a week reading magazines here. >> how hard is it to convince publishers. i know it started by a conso consortium of publishers but new publishers brought in outside of that. >> we started with five big publishers. like hulu. we have hearst, meredith, news corp., time inc., all our investors. they have the greatest content in the world. these 80 titles, 5,000 magazines in the united states, these 80 titles represent about 50% of the business, readership, ad sales, circulation. we're going after top 10 titles and where the readers are. we brought on "new york" magazine recently, men's fitness. it's matter of cherry picking

the top titles and going where the racered aeaders are. >> say you call up winter media, us magazine. i'd like us magazine on that. i assume says you have to pay more. >> it's a different type of model, a digital model. don't take the print business model and graft it on digital. about continuous engagement about that 150, $180 a year i will spend as a household. the numbers work. we pay our publisher based on amount of engagement with the magazine. you love new yorker, someone lo loves men's health. >> if i'm reading most of new yorker are you getting more of my share? >> these magazines come pete aggressively. the key is the world today outside of next issue, what is it? i want a magazine, find it in the app store and download it. >> if andrew reads the new yorker more than anything else,

the slice of his payment, most of it is in "the new yorker"? >> we do it with the amount of time you spend on the magazine. >> the magazine in their rate base to advertisers, they count -- do i have to open and look at the ads for them to count it? how does that work? >> rules are evolving. there's a big debate among the publishers and advertising industry, okay, do i have to open it? is it based on dwell time? what if i have bone na petite in my library. >> and never look at it? >> like bona appyappy-like it showing up in your library and you never look at it. it's in your library. today, all about engagement. can you make mask magazines mo

relevant. >> when you thought of this idea and went to the publishers, was that part easy? >> you know, in a joint venture like this with fierce competitors there's overhead in terms of management. we got everybody on board. the difference from my tivo days, the industry saw this and said, let's attack it aggressively. we got them on board and they're competing aggressively. >> thank you for coming on board. >> you're looking at me like i'm crazy. >> i'm embarrassed for you. >> "people" magazine -- >> i don't even know who those people are, my god, she lost her baby! who is she? never heard her name before. >> i will show you right here. what's happening with kim and tanya. here it is. >> i know who they are. jim cramer and the latest on the dell buyouts, heading down to the new york stock exchange next.

let's get down to the new york stock exchange. jim and david join us now. good morning, guys. >> most exciting day of 2013. >> we've got jpmorgan. we've got the goldman blowout. david, before you go, i need to

hear more on del. where do you want to start? >> i'll start quickly with dell. we'll obviously talk about it on the show. finally got details in terms of where they're talking in price. more importantly, answering your question, when you're reporting, you make certain assumptions. one of the key ones is, my god, given the size of it, it's got to be a 4 or $5 billion equity check. when you finally make the call and get through and get calls back, you know that problem. >> yeah. >> i find that is probably closer to a $2 billion equity check. making the level of difficulty much less because of repatriation. >> pay 35% tax. >> and they're willing to do it. silver lake in the driver's seat. so we'll see how the stock trades today. this thing looks like it has a lot more legs to it. >> david, when you say more likely, give us the number.

yesterday they said 80% chance it doesn't happen. >> i have to go the other way at this point. that's based on reporting, andrew, not making any guesses. but speaking to people close to this thing, i think the chances are far higher than 50%. i would have gone 50/50 yesterday. but based on reporting late yesterday, i think you've got -- >> 13.5, 14, do you think they could get it for that? >> that's the question. what are they going to do? where are they going to come down in terms of price. we're going to talk a lot more about this on "squawk on the street." we've got plenty of other things this morning. >> this is a new trend. these are ceos that have said, i've had it, i can't take it anymore, i've got cash, cheap debt, i'm just going to own the company. >> it helps when you own 15% and you've got billions outside that you can bring in to help you buy it. >> jim, your old employer, do you have any views on goldman sachs? >> you see the compensation

number come down dramatically and revenues go up, it's 15%. if i didn't know any better, i would tell you, they're back, bigger than ever. you've got to give at least 20% premium. 160, 170. >> mr. dimon? >> look, i think the stock goes to 42, they gave him a pay cut. the quarter was okay. a lot like other banks. >> what did you think of that report, andrew? you've written a lot about the whale. >> i've been trying to go through it. it's 100 some-odd pages. >> it's challenging when you're also anchoring a show. >> you passed on the answer to that question is what you're saying? >> i'm going to -- >> it's now -- >> if you're asking me for a percentage chance -- >> the white whale is now at the national museum. >> we'll have a nice brunch on sunday. >> we are. >> i'll watch "squawk on the street" next to find out what you think.

>> you're going to brunch on sunday? >> yeah, we're having brunch on sunday. and the kids and the family. the whole kit in -- kit and caboodle. tomorrow on "squawk box," earnings alert. citigroup and bank of america reporting, we'll bring you the numbers and instant analysis. plus we'll talk debt, politics and unemployment with arianna hu hu huffington, 6:00 a.m. eastern. some day, your life will ] flash before your eyes. make it worth watching. introducing the 2013 lexus ls. an entirely new pursuit. introducing the 2013 lexus ls. we've decided to we're all having such a great year in the gulf, put aside our rivalry. 'cause all our states are great. and now is when the gulf gets even better. the beaches and waters couldn't be more beautiful. take a boat ride or just lay in the sun.

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